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Everything is So Expensive!!! Good News and Bad News

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Publish Date: July 14, 2021

Three items in this quick article: 1. Brisket Inflation. 2. Social Security “Pay Raises” 3. Omaha, Ne Social Security Workshop in October

Hello retirees/future retirees. First, the bad news.

The bad news is, almost everything is more expensive than what it used to be. For example, my smoked briskets are a lot more expensive than what they used to be! If you know me, you know that I love to smoke food on my RecTeq. And if you know me, you know that as a corn-fed Southwest Iowa guy, I like to eat! And if you know that I have an 11 year-old son and a 14 year-old son, you know that my grocery bills are massive!!! My desire for food nowadays is unfortunate because of the price increases that we have experienced. Beef brisket was over $4.50 a pound at a grocery store I was at last night!

It is not just those that eat food (which is most of us) that should be concerned about inflation, because the prices of almost everything else have increased. If you have been anywhere at all – Walmart, car dealers, grocery stores, etc. – you know that it does not take an economist to tell you that prices have gone up. Check out the below graph that I pulled off the US Bureau of Labor Statistics website that is a common benchmark for inflation. This is a simplified chart of the “CPU-U” index. I simplified the actual chart down to two columns. One column shows the categories that you spend your money on and the other column is the percentage increase/decrease from June of last year to June of this year. These percentage increase numbers are the largest that we have experienced in recent history.

For example, I will soon be buying a car for my 14-year-old. You can imagine I almost spit out my coffee as I read what the percentage increase was over the last year for “Used Cars and Trucks”. Over 45%!!!

Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by expenditure category

Expenditure CategoryJune 2020 – June 2021
All items5.4
Food2.4
Food at home0.9
Cereals and bakery products0.2
Meats, poultry, fish, and eggs0.7
Dairy and related products0.8
Fruits and vegetables3.2
Nonalcoholic beverages and beverage materials0.2
Other food at home0.4
Food Away From Home4.2
Energy 24.5
Energy commodities44.2
Fuel Oil44.5
Motor fuel44.8
Gasoline (all types)45.1
Energy services6.3
Electricity3.8
Utility (piped) gas service15.6
 
All items less food and energy4.5
Commodities less food and energy commodities8.7
Apparel4.9
New vehicles5.3
Used cars and trucks45.2
Medical Care Commodities-2.2
Alcoholic beverages1.9
Tobacco and Smoking Products7
Services less energy services3.1
Shelter2.6
Rent of primary residence1.9
Owners Equivalent Rent of Residences2.3
Medical care services1
Physicians Services4.1
Hospital Services2.4
Transportation services10.4
Motor Vehicle Maintenance and Repair3.1
Motor vehicle insurance11.3
Airline fares24.6

Many pundits will say that this inflation is “transitory” – which is a fancy ivory tower way of saying temporary. Note: As somebody with a finance degree, Two securities licenses, a financial columnist, two financial designations, and a lifetime of studying finance and economics, even I get disgusted with the financial Ivory Tower “lingo” that nobody understands!. Anyway, I digress.

Many believe that these price increases are temporary because of what the bond market is doing. They say that the low interest rates in the bond market is an indicator of low inflation expectations. My response to those pundits that are saying this is, the bond market is heavily manipulated right now with “asset purchases” by the US Treasury and therefore is not as reliable of an inflation indicator as what it used to be. This will be a topic that I will cover in future articles, along with an article on Bitcoin!

Many pundits also believe these price increase numbers are overhyped because of the “base effect” of comparing the current prices on these items to the depressed prices that we “supposedly” experienced last year during the height of the COVID Crisis. I don’t know about you but I never really witnessed prices decreasing on anything once the Covid crisis happened. For example, remember how toilet paper became a hot commodity???

Now, to the good news – Social Security Increases!!! It is estimated that the “Cost of Living Adjustment” for Social Security benefits for 2022 could be around 6.1%, the highest since 1983. This is because Social Security pegs the increases to the chart I referenced above. The actual-official announcement of what the COLA increase will be usually happens in October. NOTE: We are also hosting a “Virtual Seminar” on Social Security on October 7th. CLICK HERE for additional details and to register.

“The bond market is heavily manipulated right now with “asset purchases” by the US Treasury and therefore is not as reliable of an inflation indicator as what it used to be.”

Charlie Gipple, clu, chfc
Written By:  Charlie Gipple

Written By: Charlie Gipple

Charlie is the Founder and CEO of CG Financial Group, a financial services company that serves consumers as well as financial professionals. Charlie also owns and operates The Retirement Academy, which is an online resource to help financial professionals in running successful practices. Charlie is recognized throughout the industry as one of the foremost thought leaders and subject matter experts on retirement planning, life insurance, long-term care planning, leadership, storyselling, and behavioral finance. He is also an industry keynote speaker conducting 100-150 speeches per year. He has spoken at the MDRT Top of the Table as well as other large forums and has also appeared on TheStreet.com and AM Best TV. Gipple has vast leadership experience in the insurance industry as he has been an executive of various insurance companies and large Independent Marketing Organizations. With over two decades of experience, Charlie is unique in his broad knowledge across the life insurance, LTC, annuities, and securities businesses. He holds a bachelor’s degree in Finance from the University of Northern Iowa, is FINRA Series 7 and Series 66 licensed and also holds the CLU® and ChFC® designations. And now Charlie has taken his lifetime of learnings and incorporated those learnings into “The Retirement Academy”, a premier education system for insurance agents, registered reps, and broker dealers.

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